"I have continued to say we continue to support the COAG process and I made that point very clear in Sydney with Barry O'Farrell (in December)," Mr Baillieu told reporters in Melbourne on Monday.

"(But) neither of us want to see a lowest common denominator taking the lead at COAG so we have fought for a number of positions and we have been successful about that in a number of areas."

Mr Baillieu said COAG could be a slow process geared towards "getting an outcome rather than the best outcome".

"That's why we're prepared to work with NSW - it's more than 50 per cent of the population and economy - to get outcomes and we're starting off with some training, starting off with some energy efficiency measures and if there are other opportunities we'll take those as well," he said.

"Simply put, if we can benefit business by working with NSW directly we'll do it, but that doesn't mean that you can't be doing things with other jurisdictions through the COAG process."

He also dismissed a threat from Prime Minister Julia Gillard to withhold $450 million of reward payments for states and territories that are stalling on reforms such as uniform occupational health and safety (OH&S) laws.